Does Amazon Have the Answer to the Brick-and-Mortar Problem?

Amazon’s new book stores don’t look that different from the outside, but behind the traditional exterior is a ground-breaking new way of merchandising that could change retail as we know it.

NORTH AMERICA–Amazon made headlines last week with the news of its plan to buy U.S. grocery chain Whole Foods, but the e-tailer has actually been making moves into the brick-and-mortar space for several years with the launch of a series of physical book stores across the country.

License Global had the chance to visit the company’s first Manhattan location in Columbus Circle, located conveniently in the heart of New York City’s publishing district, and the experience was illuminating.

Amazon opened its first physical book store in Seattle in late 2015, followed by locations in San Diego and Portland in 2016. Now, eight stores have launched across the country, including in Boston, Chicago and Paramus, New Jersey, with five more planned for the near future.

"If Amazon is able to prove that a data-based merchandising model can work where others haven’t, then nothing will stop it from doing exactly what it did online and expanding beyond books."

The move seems bold, considering that it comes as other major book sellers such Barnes & Noble and Borders are downsizing or completely shuttering their physical operations, a trend that, ironically, was precipitated by the introduction of Amazon.com in the ’90s. (In fact, books are still the No. 1 product sold on Amazon.com).

As Derian Moore, a sales associate at the Columbus Circle Amazon Books location, points out, book stores make sense because they bring Amazon back to its roots. Who better to re-invent the book store model than the company that re-invented the book-selling model in the first place?

At first glance, the Amazon Books store doesn’t feel that different from its traditional counterparts. The store has a warm, inviting feel, outfitted with rich wood floors, mahogany-accented shelving and a chalkboard behind the counter displaying a handwritten quote of the day. But the familiar set-up belies the fact that this is actually a whole new retail model.

The first hint comes when you realize all the books are placed cover out, not a spine in sight. The second, when you see that not a single product has a price on it. Instead of prices, each book features an actual customer review (typos and all), barcode and star ranking from Amazon.com. To find out what a book costs, you must take it to one of the scanners placed throughout the store, or use the “Amazon” app on your phone. Why? Because, just like they do online, Amazon Prime members get a different price on products in the store, not to mention that it drives customers to the company’s app.

But most interesting is the fact that the store is merchandized almost wholly based on data from Amazon.com, translated by a “curation team” at Amazon’s Seattle headquarters. And this is where the true power of the concept lies. Alongside more traditional sections such as Fiction or Business are sections such as Hotly Debated on Amazon.com, Books Kindle Readers Finished in 3 Days or Less and even an, If You Like This, You’ll Love This section.

Almost every product in the store is either a best-seller on Amazon.com or has a rating of four stars or higher, which has led some purists to bemoan the quotidian nature of the store selection. But what does Amazon care about the literary elites? It’s using its shelf space on products that it knows for a fact will sell. This might be the key to success where others have failed.

And if Amazon is able to prove that a data-based merchandising model can work where others haven’t, then nothing will stop it from doing exactly what it did online and expanding beyond books into other verticals such as toys, apparel, or even grocery stores.

Don’t have an Amazon book store in your neighborhood yet? We’ve got you covered. Just scroll down to see more of the Amazon Books store in Columbus Circle.

Amazon isn’t the first company to recognize and harness the power of data to be more responsive to consumer demand. Check out this LicenseTV episode with Robert D’Loren of Xcel Brands (owner of the Isaac Mizrahi brand), who talks about how he is using data to get ahead of fashion trends.